Consigned goods are YOUR property, the court cannot sell them off if
you can prove ownership.

It would be easy enough to have in your written consignment
agreement that you retain title to the goods until paid for. There
have been cases of diamond dealers reclaiming their goods when stores
went bankrupt. You’d need a lawyer to pursue it with the Federal
Bankruptcy Court so it wouldn’t pay until a certain dollar figure
value was reached.

But ofcourse that wouldn’t protect you if the gallery just went
south in the middle of the night. But you could pursue a criminal
complaint. Its called conversion. Might be a good idea to get some
personal info on the owner in advance.

Consigned goods are YOUR property, the court cannot sell them off
if you can prove ownership.

My may be a little dated, however there were a number of
incidents in the past in which the courts considered consigned (or
memoed, in these cases, which is effectively the same thing) goods as
part of a store’s assets and sold them off. Quite a few people lost
money in bankruptcy cases on this that they had nothing to do with
other than having their goods in the store. Things may have changed a
little over the years but it is my understanding that most of the
time you will lose your goods in these cases.

Actually, based on my experience with my mother’s bankruptcy (I
haven’t been a party to a business bankruptcy - yet;-) you don’t
really need a lawyer. You just show up at a hearing with proof that
the bankrupt entity owes you money and either get paid or strike a
deal. It’s up to the referee. No big court deal, just a private
meeting in a small conference room.

Consigned goods are YOUR property, the court cannot sell them off
if you can prove ownership.

I have little direct experience with consignment - I just flat don’t
believe in it as a business plan in the jewelry world, but that’s
just me. But NeilTheJeweler, above points out the only thing that
means anything. People who take goods on consignment are literally
borrowing them from you with hopes of selling them (and if they don’t
have insurance, run). If they sell those goods and don’t pay you,
that is called stealing.

One of the galleries I consigned with a few years ago went belly-up.
I knew a few of my pieces sold, but I got no check at the time of
the closing of the gallery. Of course I was upset about that, wrote
it off in my mind. FOUR years later, I rec’d a package with a check
and the remaining inventory - the note said, “i’m so sorry I didn’t
send this earlier” - there were problems with depression - but I was
SHOCKED that this gallery owner made good. My feelings about her
changed drastically. Most people would try to take care of their
obligations!

Consigned goods are YOUR property, the court cannot sell them off
if you can prove ownership

Sorry, that’s incorrect. Unless you have a proper UCC filing on
record, you’ll lose the goods in a foreclosure action. All the
contracts, agreements, invoices in the world won’t help you.

Consult a bankruptcy attorney or someone who’s “been there”. And most
Jeweler’s Block policies do NOT insure consigned goods (insurance
can’t cover what is not owned by the policy holder). This is not my
OPINION, or my GUESS, or CUT and PASTE “knowledge”, and I know it
doesn’t sound FAIR, and my even saying it strongly probably even
offends some delicate person’s sensibilities, but ignore this at
your own peril.

A good education is always expensive, isn’t it? I’m not trying to be
pedantic or argumentative or arrogant, but there seems to be a LOT
of inaccurate “knowledge” getting passed around here. Please
remember that there are many (most?) inhabitants here in the
beginning months and years of their businesses. If we’ve “been
there, done that” we should probably share the knowledge. If we
haven’t, and don’t really KNOW, maybe it’s best to sit quietly and
try to learn or at least consult a source that is reliable and
accurate before posting here. Keep Orchid useful, not just cluttered
with “I think…”.

There is a difference between principles of law and what sometimes
happens in court. Hence the variation in the opinions we see posted
here about bankruptcy and consignment.

Which is why it would be wise to have a business attorney review your
proposed consignment agreement and represent you in court if it ever
gets to that sad state. Its pretty hard to insist on do-overs because
you declined legal representation. You need your rights protected
there and then.

But remember it all costs money. Lawyers charge 2-300 bucks or more
an hour for court time plus there’s prep time and filings etc etc.
The value of your consignment and the risk you perceive will have a
bearing on the extent to which you try to protect yourself. The
point of your agreement would be to persuade a troubled gallery that
its better for them to return your goods. Why not ask for a personal
guarantee? It may scare off some gallery owners, perhaps that’s a
good thing?

Perhaps those artists who regularly use consignment at galleries
could form an organization to share their experiences about specific
galleries. A kind of credit bureau. JBT for artists?

there were a number of incidents in the past in which the courts
considered consigned (or memoed, in these cases, which is
effectively the same thing) goods as part of a store's assets and
sold them off. Quite a few people lost money in bankruptcy cases
on this.

Two words for you in all of this… : “People’s Pottery”. Understood
they went under some years ago…taking many with them. They bought
outright as well…but from my understanding from other jewelers,
didn’t pay their bills on time. Big bills too. Few wanted to press
too hard.

I’m with you on the consignment/foreclosure issue, but insurance
companies (well at least Jewelers Mutual does) write most policies
with a rider for goods not owned by the policy holder. Goods on memo
in my store are covered the same as stuff I own outright (I know
because I had to make a claim recently on a memo item and it was
covered). Of course it depends on your insurance company and whether
your agent is good enough to know what to ask for as well. But, as
you said, in the case of bankruptcy the courts can claim consignment
goods as part of the assets.

There is a difference between principles of law and what sometimes
happens in court. Hence the variation in the opinions we see
posted"

Here in the bay area there’s been a lot of coverage about back-dating
stock options. So, let’s take a poll: How many of you would like to
turn back time? You could buy stocks, play the lottery… How many
of
you feel it’s right that corporations can do it, but you can’t? “IRS?
sorry, but in my world it’s not April 15th, it’s March 15th - see ya
next month…” The fact that it’s legal doesn’t make it right. Same
with consignment and bankruptcy. The fact that a business can sell
your property to pay their way out of their mess may be legal, but do
you really want to deal with crooks? It’s stealing. Maybe it’s legal,
but it’s stealing.